September 20, 2017

Busy Isn’t Better: How Our Go-Go-Go Lifestyles Hurt Our Finances

This post is written by Chelsea, an investment professional and personal finance nerd who founded the personal finance blog Mama Fish Saves. Over at Mama Fish Saves Chelsea aims to provide families with the simple answers to all the money questions they didn’t learn in school, including the basics of budgeting, investing, increasing income, and raising financially smart kids!

Busy has become a lifestyle. A false virtue synonymous with important and valued. It’s invaded our workspaces, our homes, and our relationships by making every moment that isn’t multi-tasked somehow unproductive. The answer to, “How are you doing?” has not so subtly shifted from, “Doing well, thanks, how are you?” to “Oh man, I am so busy!”

Adverse aspects of the busy mindset have been covered in the media and by productivity gurus everywhere. However, we may have overlooked a major part of our lives that faces a long-term risk from all that go-go-go: our finances.

Busy means we prioritize the urgent over the important

Have you ever had a major task to do and suddenly you find yourself changing that flickering light bulb in the kitchen or cleaning the tile grout in your shower? Sure, those things need to be done. They’ve been on your to-do list for days! But do they need to be done now? Probably not. This “productive procrastination” dynamic is multiplied tenfold when the necessary task is something that won’t impact us for 20 or more years. Most often, our retirement.

A few weeks ago, a good friend reached out to me to ask if I could look at her and her spouse’s investments. They worked with a financial advisor from their brokerage a few times a year but wanted a second opinion on fund choice and asset allocation.

When she sent over their figures, I was shocked. While she was invested in all index and target date retirement funds, she and her husband were paying a weighted average of 1.15% in fees! I called her immediately to tell her that we could talk about asset allocation, but she had a bigger problem.

I explained that since their $54,000 in investments were all in Roth and Rollover Traditional IRAs, they could roll everything into Vanguard, with no tax impact, and lower their fees from 1.15% to 0.16% in an equivalent Target Date fund. Plus, if she was willing to try a three-fund portfolio we could reduce their costs to a weighted average of 0.05%! Even if she and her husband never invested another penny, this simple move would mean over $50,000 more in their retirement account in 25 years.

She told me she had to talk to her husband and she would get back to me. Over a week later, I hadn’t heard from her. When I gave her a call, she apologized and said they hadn’t had time to think about it. “We’re just really busy right now. Can we talk about it again in a few months?” I love her dearly, but I won’t be holding my breath waiting for that call. Just like that estate planning lawyer’s business card has been gathering dust on my desk since my son’s birth, moving investments or writing wills tends to take a back seat to all the little things that seem more urgent.

When we cram our schedules full each and every day, down to the most minute activities, we don’t leave ourselves time to consider the future. We don’t have the mental capacity or mental quiet to question the tasks we are doing. We just do. As the old saying goes, “too busy chopping wood to sharpen the axe.”

However, if we want to reach our goals, we need to spend our energy smarter. Running on the treadmill burns calories, but it doesn’t get you anywhere. Give yourself the breaks you need to realize where you could swap 20 minutes virtually clipping $0.50 grocery coupons for 20 minutes saving your future self $50,000.

Busy means we confuse complicated for sophisticated

In a world where busy is a virtue, many of us end up placing chaos on a pedestal. Instead of looking for the simple solutions, we accept the complicated ones, especially when it comes to the difficult areas of our lives. These confusing and chaotic solutions so closely match our view of the problem, they just make sense! But for many people, money and investing pop to the top of their tough questions list. A place where chaos can destroy your wealth.

Investing is hard for a newbie. It is filled with jargon you need to know, endless “advisors” trying to sell you products you don’t need, and all that terrifying risk! It is overwhelming. So when your friendly neighborhood personal finance blogger tells you the key to building wealth boils down to a few easy steps, they might as well be telling you to jump out of a plane. Typical responses include, “Invest in only one to three funds?” and “Keep investing even when the market is crashing!?” and “Do the same thing for 20 years?!” Not exactly a celebration of the beauty of simplicity.

A “busy” life means one where we don’t stop moving. We listen to podcasts while we run, check email at our child’s soccer game, and yes our spouses while we fold the laundry. When busy is our normal, patience and consistency is hard. We’ve learned to crave instant gratification and to view constant tweaks and improvements as progress. If we aren’t shifting our investment strategy with every change in the wind, what will we say when our neighbor asks if we bought stock in Amazon?

In our lives of busy, we forget that investing is like gardening. Yes, you have to prune back what isn’t working. Find ways to improve your budget, earn more, and invest more if you want to reach your goals faster. But if you dig up the seeds every time your bounty doesn’t sprout overnight, you’ll never grow a thing. Consistency and dedication are worth far more than busy.

Busy means we waste time we could be using for development

Parkinson’s law - the idea that work expands to fill the time available for its completion - explains how Elon Musk manages to be the micromanaging CEO of two multi-billion dollar businesses, a father to five, and working out a few times a week, all while I can’t find time in my schedule for meal planning. For one, I’m sure he spends way less time cruising Twitter than I do.

As soon as the word “busy” comes out of our mouths, we make it the truth. We say that our schedules are full and they become full. It isn’t some magic spell, but just by telling ourselves we are busy we allow our lives to fill up around the tasks on our to-do list. Even if our to-do list is full of pointless things like, “clean Facebook friends list,” and “triple check fantasy football lineup.”

We only have so many hours in the day and those who are best at building wealth know how to spend those hours wisely. They spend hours reading to boost their knowledge instead of watching TV, developing skills to increase their earnings power, reviewing their goals, and thoughtfully considering how they want their lives to look in the future.

Continuous learning is a key to long-term financial success. When it comes down to the question of “save more or earn more” there is an upper bound on how much more you can save, but no limit on how much you can earn. Making time for developing and learning is an investment in yourself. It will allow you to be opened up to new ideas and lessons, a way to find a career path or advancement opportunity to increase your overall satisfaction as well as your worth. There is a reason the average CEO reads 50-60 nonfiction books a year! But if you can’t stop saying you’re “busy,” you may miss the easy opportunities for growth!

How to break the busy mindset to build wealth

In today’s societies of smartphones, watches that alert you to every text and new update, and constant other stimulation that keeps our minds in overdrive it can be very, very hard to break the busy mindset. It is still something I work on every day. But to help get you started, here is what has worked for me.

First, take the time to make a budgeting and investment plan. Find the time in your schedule to be thoughtful, e.g. not the eight minutes slammed dinner and getting your daughter to her basketball game. Remember, simple is better! Then, when a news headline or neighbor with a stock idea has you wanting to throw the whole plan out the window, sleep on it. Jot the idea down and give yourself 24 hours to decide how it fits in with your plan. Have your goals changed? Is there a reason this idea doesn’t fit in with your current plan? What could it mean for your future if you're wrong about this new path? When you have a financial plan developed from a rational state of mind to compare the idea with, and when you’ve given the idea time to breathe, you may be less likely to throw the baby out with the bath water.

Second, make time. We get done the things we believe we need to get done. Try to prioritize your to-do list not by how long each thing will take, but on how much its completion will impact your life. When I started to keep track more carefully, I found that I was terrible at predicting how long things would take. Things I hadn’t done before were way overestimated in my mind. Not because they were really complicated, but because their virtue of being new to me led me to cautiously overstate them. When real priorities were at the top of the list, they just got done!

Finally, and perhaps most importantly, let’s all make a pact to stop constantly saying we’re busy! Our friends, our sanity, and our future selves will thank us for it.

Comments

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I feel this so much. These days it feels like we're in a contest to see who can be the busiest or most productive. I think there's a lot of value in trying to live slowly and disconnect from the hectic world.